Cheryl Reicin and Eileen McMahon Comment on Investing in Marijuana in Canada

Canadian Lawyer magazine looked to life sciences and drug regulatory experts Cheryl Reicin and Eileen McMahon for their thoughts on the opportunities for investors—and what parameters further legislation will provide—around the emerging marijuana market in Canada. Below is an excerpt of the article.

Cheryl Reicin, a partner at Torys LLP, advises private equity firms, venture capital funds and investment banks that fund biotechnology companies. She says that, these days, institutional investors and large banks are asking her team for insight into how [marijuana-related regulation and investment] will unfold. Businesses and investors are jumping at the industry now because they feel they can't afford to wait, Reicin says.

"It's unknown, and this is sort of the fun in the opportunity," she says. "It could be that once the regulations come out, some big drug companies could come and wipe out some of the smaller players."

Eileen McMahon, a regulatory lawyer also at Torys, says the level of barriers to entry into the industry will determine which players will enter the game. High barriers, for example, will draw those who are already comfortable with thick layers of regulation, such as those in the drug industry.

"Who is currently looking at this? Everybody," McMahon says. "You've got banks looking at it, you've got pharmacies looking at it. You've got possibly liquor distribution companies and tobacco companies. Many of them are interested in how this shakes out, but, ultimately, the opportunity will turn on what the law says. So the question is where will the barrier to entry fall?"

No one can, of course, answer that question with certainty at this moment. But even with many unknowns, the lawyers Canadian Lawyer spoke to aren't shying away from advising clients who come knocking on their doors. "Remember, we are in the business of what ifs," Reicin says. "We come up with the metrics of potential issues, then we work with clients to decide which ones we want to address and how we address them, and they decide how much risk they're willing to take."